AMI does not consider that it is the role of a lender to dictate the fee policy of FCA regulated intermediary firms.  FCA Consumer Duty is clear that each entity is responsible for its own fair value assessment and indeed the rules indicate that it is for the advisory firms at the end of the chain to make the assessment that all costs, including that the total cost of borrowing is suitable for the consumer.  This policy interjects the lender into the wrong part of the process.

AMI has no issue with the amounts cited in these Lloyds Group announcements nor lenders actively reviewing fees internally.  The issue is the principle of going public with this information and the loss of trust it signals in the ability of intermediary firms to accurately assess the fair value of their own service offerings. We are concerned that this move will encourage other lenders to add their policies to the public domain, adding layers of confusion, with a range of ‘fee caps’ that will not act in the interests of all consumers.  AMI does not wish to see consumers being excluded from some lenders because of their fees policy which would still be the best and cheapest outcome for the consumer.

Under Competition Law, placing a cap on fees could also be seen by some as an unfair restraint on trade or an attempt to introduce “resale price maintenance”.  AMI is concerned that some intermediaries will see this as a market norm and gravitate their fees policy towards it.

This policy announcement has already provoked much debate in the intermediary community via social media.  By defining this as a broker policy it misses the point on the work done by fully qualified and regulated advisory firms.

Robert Sinclair, AMI Chief Executive says:

“This intervention in the market by publication of this policy is unhelpful.  I have been aware for some time that Lloyds Banking Group along with other lenders have been monitoring intermediary fees and having both informal and formal discussions with firms to establish “fairness” and appropriateness.  To date these discussions have been relevant and helpful.

I do not think that regulation has dictated to lenders that they should determine the fees an intermediary charges.  It stretches their Consumer Duty accountabilities to an extreme. We support fee “outliers” being challenged by regulators and networks in a constructive way, not by those whose products we are advising on and distributing. That seems to me to be a slippery slope towards price-setting for a market and potentially restricting consumer choice.”